Geoff Bascand: Renewing the RBNZ's approach to financial stability

Speech by Mr Geoff Bascand, Deputy Governor and Head of Operations of the Reserve Bank of New Zealand, to the 15th Financial Markets Law Conference, Auckland, 26 June 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good afternoon, it's good to be here today. I'm going to talk about the Reserve Bank's role in ensuring financial stability and how our approach to prudential regulation and supervision is evolving in line with our own, and society's, risk tolerance.

You'll hear me talk about how the Bank's approach is expanding and becoming more intensive, so that we are more active in addressing vulnerabilities in the financial sector. This is in response to our own experience, and a publicly identified need in formal reviews of our approach. We are building our capabilities to undertake deeper analysis of risks to the financial system and shift to a more intensive supervisory model.

It's a busy time at the Bank as we also undertake with Treasury a fundamental review of the statutory framework for delivering financial stability. The government has announced in-principle decisions to modernise how the Reserve Bank is governed and its objectives, powers and regulatory perimeter. These decisions strengthen our financial stability focus and set the foundations for enhanced performance, capability and accountability of our financial stability functions. Our 'soundness and efficiency' objective is to be replaced with an explicit financial stability objective. The single decision-maker model is to be replaced with a governance board responsible for financial policy. And the artificial distinction between banks and non-bank deposit takers is set to be removed.